A survey on real estate residential market of Twin cities by M.L.Rao. Chief Coordinator, Equate Realtors, Hyderabad, India. http://www.equaterealtors.com/
Overview
Hyderabad, the capital of Andhra Pradesh, has been known for its heritage, traditional hospitality and a thriving software industry. It is one of the largest metropolises of India, with a population of around 6.1 million people, spread over an area of approximately 625 sq.kms. The capital is in reality the twin cities of Hyderabad and Secunderabad linked together by the Hussain Sagar Lake and is now the second largest city in India with the recent inclusion of the 12 municipalities being merged into Greater Hyderabad.
This city that once predominantly depended on engineering based industries and trade as a means of income has seen a dramatic change over the last few decades. With the IT boom, companies like Microsoft, Oracle, Dell, Delloite, IBM, Perot, Polaris, Accenture, CA, HP, GE, UBS, Convergys and Franklin Templeton have set up offices in Hyderabad. This led to the development of infrastructure facilities and the general growth of the contiguous locations surrounding the Hitech City area, also referred to as Cyberabad, which has a coherence of its own due to the pace of development and the attraction of overseas investors. In recent times, owing to the interest generated in the Hitech City, real estate development has picket up considerably in the adjoining Gachibowli area where a number of campus development by IT major like Microsoft, Infosys, Wipro, Polaris, Kanbay, UBS, Franklin Templeton etc, are located. This has led to a substantial inflow of IT / ITES professionals, thus escalating the demand for Grade-A residential projects across Hyderabad. The research and survey done by professional real estate broker named M.L.Rao, chief coordinator of Equate Realtors (www.equaterealtors.com), having immense experience in real estate broking since 21 years at Twin Cities and having branch at Vizag.
Apart from the office market of this region, Hyderabad also as numerous prestigious educational institutions like Osmania University, ICFAI and Indian School of Business. The floating population of students from these universities has impacted the lifestyle and trends of the city as well. While a few years ago students stayed in hostels, nowadays they prefer to share apartment accommodations with batch mates.
Till a decade ago the mid-end residential development in Hyderabad were largely concentrated in locations like the Uppal Zone, Dilsukhnagar, Koti, Secunderabad, etc, while the localities of Banjara Hills, Jubilee Hills, and nearby areas continued to be premium locations. Market in these locations soon became saturated and due to non-availability of land parcels, builders were forced to move to other locations. Consequently, large scale developments are now seen in locations like Kukatpally, Madhapur, Miyapur, Madinaguda, Gachibowli, Nizampet, Kompally, Tellapur and Gopannapally.
Current Scenario
Hyderabad, the capital of Andhra Pradesh, has been known for its heritage, traditional hospitality and a thriving software industry. It is one of the largest metropolises of India, with a population of around 6.1 million people, spread over an area of approximately 625 sq.kms. The capital is in reality the twin cities of Hyderabad and Secunderabad linked together by the Hussain Sagar Lake and is now the second largest city in India with the recent inclusion of the 12 municipalities being merged into Greater Hyderabad.
This city that once predominantly depended on engineering based industries and trade as a means of income has seen a dramatic change over the last few decades. With the IT boom, companies like Microsoft, Oracle, Dell, Delloite, IBM, Perot, Polaris, Accenture, CA, HP, GE, UBS, Convergys and Franklin Templeton have set up offices in Hyderabad. This led to the development of infrastructure facilities and the general growth of the contiguous locations surrounding the Hitech City area, also referred to as Cyberabad, which has a coherence of its own due to the pace of development and the attraction of overseas investors. In recent times, owing to the interest generated in the Hitech City, real estate development has picket up considerably in the adjoining Gachibowli area where a number of campus development by IT major like Microsoft, Infosys, Wipro, Polaris, Kanbay, UBS, Franklin Templeton etc, are located. This has led to a substantial inflow of IT / ITES professionals, thus escalating the demand for Grade-A residential projects across Hyderabad. The research and survey done by professional real estate broker named M.L.Rao, chief coordinator of Equate Realtors (www.equaterealtors.com), having immense experience in real estate broking since 21 years at Twin Cities and having branch at Vizag.
Apart from the office market of this region, Hyderabad also as numerous prestigious educational institutions like Osmania University, ICFAI and Indian School of Business. The floating population of students from these universities has impacted the lifestyle and trends of the city as well. While a few years ago students stayed in hostels, nowadays they prefer to share apartment accommodations with batch mates.
Till a decade ago the mid-end residential development in Hyderabad were largely concentrated in locations like the Uppal Zone, Dilsukhnagar, Koti, Secunderabad, etc, while the localities of Banjara Hills, Jubilee Hills, and nearby areas continued to be premium locations. Market in these locations soon became saturated and due to non-availability of land parcels, builders were forced to move to other locations. Consequently, large scale developments are now seen in locations like Kukatpally, Madhapur, Miyapur, Madinaguda, Gachibowli, Nizampet, Kompally, Tellapur and Gopannapally.
Current Scenario
While the real estate market in Hyderabad has witnessed an immense amount of activity in the last decade, there has been an unprecedented boom in the last two years and residential capital values have witnessed a rise of around 75-130%. An estimated residential supply of around 56.31 mn.sq.ft is likely to enter the Hyderabad market by the end of 2009-10.
Infrastructure project like the Outer Ring Road (ORR) and the development of SEZs proposed by the government has led to speculation in the real estate market. This could be the cause for demand for land parcels and residential accommodations in Shamshabad, Maheshwaram and locations along Vijayawada highway. The housing requirement in the Madhapur-Gachibowli corridor has resulted in large scale Grade-A projects by major developers like L&T Info city, Lanco, Indu Group, IVRCL, Emaar-MGF, My home, IJM etc., ( Local builders like Manjeera Constructions, Alliance, Aparna etc). in the western and north western locations. The demand in Madhapur, Kukatpally, Jubilee Hills, Banjara Hills, Somajiguda, Yusufguda and Gachibowli as compared to other locations in primarily driven by the IT / ITES professionals with higher income levels enabling them to invest in these prime neighborhoods.
A notable trend in the buyer behavior of this city is the consistent demand for villas and row houses especially in the peripheral locations. This could be due to the buyer’s perception that the price of land will always be bullish. Buyers seem to be ready to commute 18-20 kms out of the city and invest in a villa. Of the total estimated supply for 2009-10, 25% will be in terms of villas and bungalows while 75% will be in the form of apartments.
Central Zone
The central zone includes locations such as Begumpet, Banjara Hills, Jubilee Hills, Somajiguda, Panjagutta, Chikkadpally, Ramkoti and Malakpet, most of which are in and around the Hussain
Sagar Lake. Majority of the locations form the traditional residential hubs of the city and capital values in this region range between Rs.2, 500-6,300. Since there are fewer land parcels available, most of the constructions encompassed in this region are stand-alone developments. Locations such as Banjara Hills and Jubilee Hills are still considered as prime residential locations and cater to the higher income segment. Construction activity in this micro-market is mainly observed on the inner roads of Banjara Hills Road No.10 and 12. However a large percentage of these projects are redevelopments of existing villas and bungalows. The projected supply to enter this zone by the year 2009-2010 is 1.61 mn.sq.ft. A few notable projects for this region would be Aditya’s Green Park with high-end apartments in the vicinity of Jubilee Hills on 6.91 acres of land, RRS Towers on Raj Bhavan Road and Prajay Riveria at Banjara Hills.
Northern Zone
Although a large percentage of the northern region is cantonment area, the project size in this micro-market is on a much larger scale than in most other locations of the city. This region has an even mix of both apartment as well as villa and bungalow development. This can be attributed to the fact that a considerable amount of the demand in these locations is investment driven. Maximum construction is being seen in Nizampet, Kompally, Bowenpally, Qutbullapur and Nagpur Highway and capital values for apartments and villas in these regions fall between the range of Rs.2,550-4,500 sq.ft. Many of the prominent developers have take up projects in this region as there are large expanses of land available complimented by excellent infrastructure facilities. Large projects in this zone include Ambience Neighbourhood by Ambience Group and Casa Estebana, a luxurious project by Koncept Ambience Group comprising 45 villas. A few other notable projects by local developers and Aditya’s Grand Ville of 100 independently villas and Ashoka’s ‘A la Maison’ in Kompally, Splendid Aparna Integrated township. This region is the second largest contributor to Hyderabad’s residential supply and has an estimated 9.13 mn.sq.ft. that is likely to enter the market by 2009-10.
Eastern Zone
The eastern zone comprises of locations such as Shameerpet, Yapral, Cherlapalle, Pocharam, Uppal, Kuntlur, Musheerabad, Marredpally and parts of Secunderabad, and has an estimated supply of around 2.46 mn.sq.ft that would enter the market by 2009-10. This region mainly consists of gated community and villa development, as buyers prefer to take a villa rather than an apartment at the prevailing rates. The northern part of this region has a majority of projects in Shameerpet and Yapral. Two large projects in this micro-market include those by Prajay Engineers Syndicate Ltd called Prajay Celebrity Villas and Prajay Bloomingdale. While the northern half of this zone is experiencing active real estate development in the above locations, the rest of the eastern zone is witnessing activity concentrated at Pocharam on Warangal highway. A notable construction in Whitefield is that by Hallmark Construction called Express Towers which has an amphitheatre among the facilities being offered. This zone is both end-user as well as investment driven, the capital values ranging between Rs.1, 600-3,500 /sqft.
Western Zone
The western part of the city encompasses locations in Cyberabad such as BHEL, Madhapur, Gachibowli, Gopannapally, Kukatpally, Miyapur, Nanakramguda, Manikonda, Bachupally, Kondapur, etc. this region with a supply of approximately 39.72 mn.sq.ft. is the major contributor to the overall supply that is likely to enter the Hyderabad residential market by 2009-10. North western regions like Bachupally, Borampet and the locations around the Biotech Park mostly have villa and row house development, while Madhapur, Gachibowli and Kukatpally, and have high-end residential apartments which are 5-14 stories high. L&T Serene County in Gachibowli, spread over 31 acres, includes a shopping complex and community centre.
Other notable projects in these locations include Hill Ridge in Gachibowli and Lanco Hills in Manikonda. Raintree Park, a joint venture township project between Andhra Pradesh Housing Board and IJM (India) Infrastructure Limited, is being developed at Kukatpally on 35 acres. Locations like Nadagandla, Gopannapally, and Hitech City have a preponderance of demand for apartments as compared to the rest of the western region. The demand is end user driven with a majority of the supply being taken up by those working in Hitech City and the neighboring commercial hubs. Development of gated community or bungalow schemes is on a rise in this region as it provides support infrastructure for the same. Some of the prominent constructions in these locations include Silicon County at Madhapur by the Jayabheri Group, Prajay Ridge Wood at Nadagandla and Maytas Hill County at Bachupally which has a business centre amongst other facilities. Most of the development in these locations are Grade-A and capital values for apartments and villas are within the range of Rs.2, 400-4,750 / sq.ft. with a demand for mostly 3 BHK apartments.
Southern Zone
The southern Zone comprises locations such as Himayatnagar in the south east and Shamshabad, Maheshwaram, Karmanghat etc. in the south. The south does not have much construction taking place with developers taking up most of the land parcels and dividing them into smaller plot layouts for sale. The ORR and the new international airport have been the key demand drivers for real estate activity in these locations. Around 3.38 mn.sq.ft. Of residential supply is under construction in the south and southwestern region. Most construction activity, however, is still in the nascent stage with the exception of a few projects like Banyan Tree Retreat by MAK Projects and Aliens Space Station II by Aliens Developers. These locations still cater to the middle-income group and till the development of Fab City along with other proposed project this trend would be unlikely to change. The capital values for apartments and villas in this zone range between Rs.1, 700-4,372 / sq.ft.
Outlook
The Hyderabad market is likely to witness considerable real estate development over the next few years with the construction of the new Outer Ring Road which would connect all the national and state highways. Locations on either side of the ORR shall witness considerable development. In addition to the proposed radial roads, the government has approved a proposal to set up a Hyderabad Knowledge Corridor consisting of IT and ITES companies covering over 20,000 acres in Ranga Reddy district. Industry experts are sceptic about availability of large land parcels with clear title for construction of gated layouts or integrated apartment complexes. Another cause for concern among developers has been the introduction of Government Order (G.O.) 86 which has laid down certain strict guidelines for building activity in city central areas. However the advantage of G.O.86 is that in the peripheral locations of the city, there is greater scope for bigger project to come up. Recently, the increase in home loan interest rates has resulted in prices stabilizing and in some locations even reducing marginally. There has been a reduction in the number of home loans that have been taken after March 2007 due to the rise in interest rates and this could lead to a drop in demand in the immediate future. Currently the average ticket size for home loans in Hyderabad is around Rs.2 million. This market resistance is causing quite a few builders to postpone public openings of booking for new projects. Greater Hyderabad however is likely to emerge as a financial hub in the near future.
Infrastructure project like the Outer Ring Road (ORR) and the development of SEZs proposed by the government has led to speculation in the real estate market. This could be the cause for demand for land parcels and residential accommodations in Shamshabad, Maheshwaram and locations along Vijayawada highway. The housing requirement in the Madhapur-Gachibowli corridor has resulted in large scale Grade-A projects by major developers like L&T Info city, Lanco, Indu Group, IVRCL, Emaar-MGF, My home, IJM etc., ( Local builders like Manjeera Constructions, Alliance, Aparna etc). in the western and north western locations. The demand in Madhapur, Kukatpally, Jubilee Hills, Banjara Hills, Somajiguda, Yusufguda and Gachibowli as compared to other locations in primarily driven by the IT / ITES professionals with higher income levels enabling them to invest in these prime neighborhoods.
A notable trend in the buyer behavior of this city is the consistent demand for villas and row houses especially in the peripheral locations. This could be due to the buyer’s perception that the price of land will always be bullish. Buyers seem to be ready to commute 18-20 kms out of the city and invest in a villa. Of the total estimated supply for 2009-10, 25% will be in terms of villas and bungalows while 75% will be in the form of apartments.
Central Zone
The central zone includes locations such as Begumpet, Banjara Hills, Jubilee Hills, Somajiguda, Panjagutta, Chikkadpally, Ramkoti and Malakpet, most of which are in and around the Hussain
Sagar Lake. Majority of the locations form the traditional residential hubs of the city and capital values in this region range between Rs.2, 500-6,300. Since there are fewer land parcels available, most of the constructions encompassed in this region are stand-alone developments. Locations such as Banjara Hills and Jubilee Hills are still considered as prime residential locations and cater to the higher income segment. Construction activity in this micro-market is mainly observed on the inner roads of Banjara Hills Road No.10 and 12. However a large percentage of these projects are redevelopments of existing villas and bungalows. The projected supply to enter this zone by the year 2009-2010 is 1.61 mn.sq.ft. A few notable projects for this region would be Aditya’s Green Park with high-end apartments in the vicinity of Jubilee Hills on 6.91 acres of land, RRS Towers on Raj Bhavan Road and Prajay Riveria at Banjara Hills.
Northern Zone
Although a large percentage of the northern region is cantonment area, the project size in this micro-market is on a much larger scale than in most other locations of the city. This region has an even mix of both apartment as well as villa and bungalow development. This can be attributed to the fact that a considerable amount of the demand in these locations is investment driven. Maximum construction is being seen in Nizampet, Kompally, Bowenpally, Qutbullapur and Nagpur Highway and capital values for apartments and villas in these regions fall between the range of Rs.2,550-4,500 sq.ft. Many of the prominent developers have take up projects in this region as there are large expanses of land available complimented by excellent infrastructure facilities. Large projects in this zone include Ambience Neighbourhood by Ambience Group and Casa Estebana, a luxurious project by Koncept Ambience Group comprising 45 villas. A few other notable projects by local developers and Aditya’s Grand Ville of 100 independently villas and Ashoka’s ‘A la Maison’ in Kompally, Splendid Aparna Integrated township. This region is the second largest contributor to Hyderabad’s residential supply and has an estimated 9.13 mn.sq.ft. that is likely to enter the market by 2009-10.
Eastern Zone
The eastern zone comprises of locations such as Shameerpet, Yapral, Cherlapalle, Pocharam, Uppal, Kuntlur, Musheerabad, Marredpally and parts of Secunderabad, and has an estimated supply of around 2.46 mn.sq.ft that would enter the market by 2009-10. This region mainly consists of gated community and villa development, as buyers prefer to take a villa rather than an apartment at the prevailing rates. The northern part of this region has a majority of projects in Shameerpet and Yapral. Two large projects in this micro-market include those by Prajay Engineers Syndicate Ltd called Prajay Celebrity Villas and Prajay Bloomingdale. While the northern half of this zone is experiencing active real estate development in the above locations, the rest of the eastern zone is witnessing activity concentrated at Pocharam on Warangal highway. A notable construction in Whitefield is that by Hallmark Construction called Express Towers which has an amphitheatre among the facilities being offered. This zone is both end-user as well as investment driven, the capital values ranging between Rs.1, 600-3,500 /sqft.
Western Zone
The western part of the city encompasses locations in Cyberabad such as BHEL, Madhapur, Gachibowli, Gopannapally, Kukatpally, Miyapur, Nanakramguda, Manikonda, Bachupally, Kondapur, etc. this region with a supply of approximately 39.72 mn.sq.ft. is the major contributor to the overall supply that is likely to enter the Hyderabad residential market by 2009-10. North western regions like Bachupally, Borampet and the locations around the Biotech Park mostly have villa and row house development, while Madhapur, Gachibowli and Kukatpally, and have high-end residential apartments which are 5-14 stories high. L&T Serene County in Gachibowli, spread over 31 acres, includes a shopping complex and community centre.
Other notable projects in these locations include Hill Ridge in Gachibowli and Lanco Hills in Manikonda. Raintree Park, a joint venture township project between Andhra Pradesh Housing Board and IJM (India) Infrastructure Limited, is being developed at Kukatpally on 35 acres. Locations like Nadagandla, Gopannapally, and Hitech City have a preponderance of demand for apartments as compared to the rest of the western region. The demand is end user driven with a majority of the supply being taken up by those working in Hitech City and the neighboring commercial hubs. Development of gated community or bungalow schemes is on a rise in this region as it provides support infrastructure for the same. Some of the prominent constructions in these locations include Silicon County at Madhapur by the Jayabheri Group, Prajay Ridge Wood at Nadagandla and Maytas Hill County at Bachupally which has a business centre amongst other facilities. Most of the development in these locations are Grade-A and capital values for apartments and villas are within the range of Rs.2, 400-4,750 / sq.ft. with a demand for mostly 3 BHK apartments.
Southern Zone
The southern Zone comprises locations such as Himayatnagar in the south east and Shamshabad, Maheshwaram, Karmanghat etc. in the south. The south does not have much construction taking place with developers taking up most of the land parcels and dividing them into smaller plot layouts for sale. The ORR and the new international airport have been the key demand drivers for real estate activity in these locations. Around 3.38 mn.sq.ft. Of residential supply is under construction in the south and southwestern region. Most construction activity, however, is still in the nascent stage with the exception of a few projects like Banyan Tree Retreat by MAK Projects and Aliens Space Station II by Aliens Developers. These locations still cater to the middle-income group and till the development of Fab City along with other proposed project this trend would be unlikely to change. The capital values for apartments and villas in this zone range between Rs.1, 700-4,372 / sq.ft.
Outlook
The Hyderabad market is likely to witness considerable real estate development over the next few years with the construction of the new Outer Ring Road which would connect all the national and state highways. Locations on either side of the ORR shall witness considerable development. In addition to the proposed radial roads, the government has approved a proposal to set up a Hyderabad Knowledge Corridor consisting of IT and ITES companies covering over 20,000 acres in Ranga Reddy district. Industry experts are sceptic about availability of large land parcels with clear title for construction of gated layouts or integrated apartment complexes. Another cause for concern among developers has been the introduction of Government Order (G.O.) 86 which has laid down certain strict guidelines for building activity in city central areas. However the advantage of G.O.86 is that in the peripheral locations of the city, there is greater scope for bigger project to come up. Recently, the increase in home loan interest rates has resulted in prices stabilizing and in some locations even reducing marginally. There has been a reduction in the number of home loans that have been taken after March 2007 due to the rise in interest rates and this could lead to a drop in demand in the immediate future. Currently the average ticket size for home loans in Hyderabad is around Rs.2 million. This market resistance is causing quite a few builders to postpone public openings of booking for new projects. Greater Hyderabad however is likely to emerge as a financial hub in the near future.
Contributed By : M.L.Rao
